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Garfield County poised to sue state

Garfield County commissioners have authorized the pursuit of litigation against the state over high health insurance costs for residents and energy-company tax refunds that are costing tax entities millions of dollars.

The issues are unrelated except for the commissioners’ contention that state agencies have failed to adequately respond to the county’s concerns, and they say lawsuits will be filed unless they get satisfactory answers soon.

Commissioners object to the fact that Garfield County has been included by the state Division of Insurance in a resort-region rating area for individual and small-group insurance under the Affordable Care Act. That has resulted in county residents being charged what are being described as the highest premiums in the country.

County officials say Garfield County was classified along with the high-cost resort areas of Pitkin, Eagle and Summit counties even though Garfield’s health care costs are much lower.

“I believe we are being discriminated against. In fact, I don’t believe it, I know we are being discriminated against,” Commissioner Tom Jankovsky said this week before joining in voting to authorize litigation in the matter.

The insurance division recently said the geographic ratings will remain the same in 2015 because no new data are available to warrant recomending a change. However, it said it will launch a study of health care costs, working with hospitals, insurance carriers, the pharmaceutical industry and other interests, and will examine regional cost variations and why they occur.

“We are pleased so many more people are gaining access to health insurance under the ACA,” Insurance Commissioner Marguerite Salazar said in a news release. “However, we heard from many people who were surprised by the differences in premiums in different areas of the state. A review of health care costs and their drivers is an important and logical next step to gaining a greater understanding of this issue.”

Garfield County Attorney Frank Hutfless said the suit will be filed “if we cannot achieve more of an immediate resolution and have the insurance department address our concerns.”

However, Garfield Commissioner John Martin noted that the earliest the county’s rating might change is 2016.

County manager Andrew Gorgey said the county has made numerous attempts to work with the insurance division on the matter.

Likewise, county officials feel the state has failed to satisfactorily answer its concerns over the handling of a 2010 Colorado Court of Appeals ruling favoring Noble Energy in a lawsuit against the Department of Revenue. Noble contended hydraulic fracturing materials such as sand are just part of the fracking process and should not have been subject to sales tax.

Its suit sought $2.8 million in refunds plus interest, but resulted in other companies putting in for refunds. The county says more than $5 million has been refunded in Garfield County alone by withholding sales tax distributions, including some refunds stemming from the lawsuit. That has affected not just the county but library, emergency responder and other tax jurisdictions. Some of those rely heavily on sales tax dollars.

Garfield County contends the Department of Revenue is legally required to obtain statutory approval to fund the judgment and has failed to do so.

The county also objects to the fact that county funds have been used to pay for the suit claim even though the county wasn’t a party to the litigation. Likewise, an official with Rio Blanco County, which also has been affected by the ruling, has questioned why the state didn’t appeal the ruling to the state Supreme Court.

While Garfield County hopes to continue trying to resolve the matter through negotiations, officials say the Department of Revenue hasn’t been helpful so far.

“Their response to very direct questions has been wholly unsatisfactory,” Gorgey said.

Department spokeswoman Daria Serna said Tuesday the department has met with the county and provided whatever information it can.

“We’ve been working with Garfield County and we will continue to work with them regarding this particular topic,” she said.

In a recent written response to the county, the department said it can “smooth out revenue distributions to Garfield County to reduce the variability of payments and allow for budget planning.” It also made other recommendations including that the county consider eliminating a machinery and machine tools exemption that represents a large portion of claims for refunds affecting the county, and consider attempting to have the legislature overturn the Noble decision.

The department also has said it only distributes rather than appropriating money, and isn’t in a position to backfill the refunded amounts.